Notes to Consolidated Financial Statements11

HOKURIKU ELECTRIC POWER COMPANY AND CONSOLIDATED SUBSIDIARIES
March 31, 2017

13. Income Taxes

 The significant components of deferred tax assets and liabilities as of March 31, 2017 and 2016 were as follows:

Millions of yen / Millions of yen / Thousands of U.S. dollars

201720162017
Deferred tax assets:
 Depreciation¥13,529¥13,090$120,579
 Liability for retirement benefits9,3839,28283,628
 Asset retirement obligations8,5148,85375,890
 Reserve for fluctuation in water levels5,8206,00951,878
 Elimination of unrealized intercompany profits5,1325,11945,747
 Net operating loss carryforwards4,369-38,947
 Expenses of disposition of polychlorinated biphenyl wastes3,6084,08632,160
 Deferred charges for tax purposes1,9102,07117,030
 Accrued enterprise taxes7778246,931
 Reserve for reprocessing of irradiated nuclear fuel and reserve for reprocessing of irradiated nuclear fuel without specific plans-2,151-
 Other12,95313,479115,449
 Gross deferred tax assets66,00164,968588,244
 Less: Valuation allowance(8,288)(7,716)(73,870)
 Total deferred tax assets57,71257,252514,374
Deferred tax liabilities:
 Assets corresponding to asset retirement obligations¥(6,599)¥(7,013)$(58,822)
 Asset for retirement benefits(4,921)(4,639)(43,863)
 Net unrealized gain on securities(2,904)(2,169)(25,888)
 Other(315)(409)(2,807)
 Total deferred tax liabilities(14,740)(14,232)(131,381)
Net deferred tax assets¥42,971¥43,020$382,993

(Note)
 The net deferred tax assets as of March 31, 2017 and 2016 are included in the following items of the consolidated balance sheets.

Millions of yen / Millions of yen / Thousands of U.S. dollars

201720162017
Deferred tax assets:
 Noncurrent assets - deferred tax assets¥38,211¥37,561$340,566
 Current assets- deferred tax assets4,7605,47342,426
Deferred tax liabilities:
 Current liabilities - others¥-¥(15)$-

 Reconciliation of the difference between the statutory tax rate and the effective tax rate for the year ended March 31, 2017 and 2016 were summarized as follows:

20172016
Statutory tax rate28.2%28.8%
Increase (decrease) in taxes resulting from:
 Valuation allowance21.32.0
 Statutory tax rate differences between the Company and consolidated subsidiaries17.62.7
 Non-deductible expenses for the tax purposes4.60.5
 Tax credit(3.7)(1.0)
 Equity in earnings of affiliates(0.4)(0.0)
 Decrease of deferred tax asset by changing the effective statutory tax rate-4.8
 Other(3.4)0.2
Effective tax rate64.1%38.1%

(Note)
 Amount of tax credit, which was included in "Other" in the previous consolidated fiscal year, is listed separately from the current consolidated fiscal year since its importance increased.
 To reflect this change in the listing method, the figure (0.8) for "Other" listed in the previous consolidated fiscal year has been divided into (1.0) for "Tax credit" and 0.2 for "Other."

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